Leverage and Prudential regulation: Difference between pages

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imported>Doug Williamson
(Categorise page and amend link narrative.)
 
imported>Doug Williamson
(Create page. Sources: linked pages.)
 
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1.  
''Financial institutions - financial system - oversight.''


Debt divided by Debt plus Equity = D/[D+E].
Prudential regulation and supervision relate to the safety and stability both of individual financial institutions and of the whole of the financial system.


For example if the amounts of debt and equity were equal then leverage under this definition would be calculated as 1/(1+1) = 50%.


==See also==
*[[Bank supervision]]
*[[Conduct]]
*[[CRD IV]]
*[[Going concern]]
*[[Macroprudential]]
*[[Microprudential]]
*[[Procyclical]]
*[[Proprietary trading]]
*[[Prudential Regulation Authority]]
*[[Regulation]]


2.
[[Category:Accounting,_tax_and_regulation]]
 
[[Category:The_business_context]]
Gearing. Leverage is based on the same inputs, but the calculation would be 1/1 = 100%.
[[Category:Identify_and_assess_risks]]
 
[[Category:Manage_risks]]
 
[[Category:Risk_frameworks]]
3.
[[Category:Risk_reporting]]
 
To increase the level of gearing in an operational or financial structure. 
 
The intention of leveraging is to improve expected net results. 
 
The consequence of leveraging is normally to increase financial risk.
 
Many financial disasters have been a consequence of leveraging up in this way in earlier periods.
 
 
== See also ==
* [[Debt]]
* [[Deleverage]]
* [[Gearing]]
 
 
==Other links==
[http://www.treasurers.org/node/8012 Masterclass: Measuring financial risk, The Treasurer, July 2012]
 
[[Category:Capital_Structure]]

Revision as of 16:00, 2 June 2021

Financial institutions - financial system - oversight.

Prudential regulation and supervision relate to the safety and stability both of individual financial institutions and of the whole of the financial system.


See also